Appointment of arbitrators – Procedures cannot be bifurcated

Nov 23, 2012

23rd November, 2012

The Supreme Court has held that the procedure followed by the Calcutta High Court in considering applications for appointment of arbitrator(s) under Section 11 of the Arbitration and Conciliation Act, 1996 in a piecemeal manner is legally impermissible.

The Calcutta High Court was considering applications for appointment of arbitrator(s) under Section 11 by following a two tier system, wherein, (i) at first instance, one Designate Judge sought to exercise the judicial power of the court to determine whether the preconditions for exercising power under Section 11 of the said Act had been met i.e. whether there were live disputes which had to be resolved; and (ii) if held in the affirmative, then another Designate Judge or the Chief Justice himself, as the case may be, would proceed with appointment of arbitrator(s). This piecemeal methodology of bifurcating procedures of appointment was held by the Apex Court, in its order dated 11-10-2012, to be completely unknown to law and not sanctioned by Section 11.

The Apex Court reiterated the exposition of law given by it in the seven judge bench decision in the case of S.B.P. & Co. v. Patel Engineering - (2005) 8 SCC 618 to hold that the Chief Justice or Designate Judge while considering an application under Section 11 exercises judicial function and that such an application has to be dealt with in entirety by either the Chief Justice or his/her Designate Judge, and not by both, making it a two-tier procedure.